Many oppose Duke Energy efficiency planThe company's proposed Save-A-Watt program is criticized as exorbitant and ineffective

At a glanceWHAT IS SAVE-A-WATT? Duke's Energy's proposed efficiency program, which would include energy assessments, efficiency kits containing compact flouroscent light bulbs, subsidies for geothermal heat pumps and other energy-efficient equipment, and weatherstripping for low-income households. The utility is reimbursed from any lost revenue that results from lost sales.WHAT CRITICS SAY: That the costs passed onto customers are too high and give them little incentive to adopt the measures.WHAT DUKE SAYS: That it needs a financial incentive to push conservation.WHAT'S NEXT: Duke will file a response to critics of the proposal with the utilities commission July 21. The N.C. Utilities Commission holds a hearing on the matter July 28.

By John Murawski, Staff Writer

Church groups, consumer advocates and environmentalists are lining up against Duke Energy's energy-efficiency program as the controversial proposal nears public hearings later his month.The critics say Duke Energy's Save-a-Watt proposal would gouge the public, enrich shareholders and result in minimal energy efficiency. The Public Staff, the state's consumer advocacy agency, warns that if Save-a-Watt were approved, a customer would end up paying $18.23 for a compact fluorescent light bulb that's available at Wal-Mart for $1.65.

The costs to customers "are two to three times the costs of similar programs to ratepayers in other states," said Public Staff expert Richard Spellman in filed testimony. "As such, the SAW approach is a bad deal for Duke ratepayers."

Save-a-Watt has been touted by Duke chief executive James Rogers as a revolutionary concept that will create a powerful incentive to save energy. Traditional efficiency programs create little financial incentive for utilities to push conservation. But through Save-a-Watt, Duke would turn energy efficiency into a corporate profit center.

"Save-a-Watt is a radical departure from past programs, and may not be embraced by all parties," said Duke spokesman Andy Thompson. "Previous energy efficiency programs have not demonstrated that they can achieve the savings we need in the future."

The proposal is headed for a July 28 hearing before the N.C. Utilities Commission. The commission is expected to rule on Save-a-Watt this year.

Earlier this year, South Carolina regulators approved a version of Save-a-Watt.But in this state, Save-a-Watt is opposed by a wide range of interests: five environmental organizations, industrial energy users, Wal-Mart, AARP, the city of Durham, the N.C. Council of Churches and the Public Staff, among others. The critics say Duke's proposal is not only exorbitant, but it won't result in significant energy savings.

"Duke is projecting that it will take the company 7 1/2 years, until December 2015, to save 1 percent of annual [electricity] sales, an amount that the top twenty electric utilities achieved in just one year," Spellman, president of GDS Associates, an engineering consulting firm, said in his submitted testimony.

Duke has proposed Save-a-Watt in response to a new state law that requires utilities to meet customer energy demand through renewable resources and efficiency programs. The costs of those programs will be paid by the utility's customers through monthly bills.

Conservation programs require administration, monitoring, new technologies and financial incentives to encourage customers to upgrade appliances and home design. And the utilities are reimbursed for lost sales.

Typically, utilities are allowed to make a modest profit on conservation programs. Duke's proposal would entitle the company to a margin of about 50 percent on top of the company's costs to run the program. That would represent a huge premium, about seven times what the company makes from operating its business, according to Public Staff calculations. The company's net return is only about 7.5 percent, and the Public Staff is recommending that Duke be allowed a margin of no more than 6.8 percent from Save-a-Watt.

Thompson said Duke would rebut the critics in a July 21 filing to the utilities commission."Under the model, we only get rewarded for achieving verifiable energy savings," he said. "This helps ensure that we will pursue innovative energy efficiency programs that will achieve significant savings that ... will help defer the need for additional power plants."

Duke is building a coal-burning power plant in the Blue Ridge foothills and proposing two new nuclear reactors.

The Public Staff said some aspects of Save-a-Watt are repackaged versions of programs Duke has offered for years, and shouldn't be counted.

The Public Staff also contends that Save-a-Watt provides little customer incentive to adopt efficiency. The agency's calculations show that the rate increase required to finance Save-a-Watt would mean that that it would take five years of energy savings to pay for the cost of a compact flouroscent light bulb. Without Save-a-Watt, such a bulb pays for itself in about six months.

The nation's top energy-efficiency programs programs cut electricity use by about 1 percent a year, the Public Staff noted. That's far more than the 0.15 percent annual reduction Duke proposes from 2009 through 2012.

Tuesday, August 19, 2008

While we are waiting for the proverbial shoe to drop on vice presidential picks (and, yes, we are interested in their environmental records), we do have some news to report: at very long last, the US EPA is about to unveil its long-awaited air pollution standards for new lawn mowers and other small gasoline engines.

Some of you will recall that we have tracked this issue for a number of years – ever since Senator Kit Bond of Missouri convinced his colleagues to make the terrible decision to take away the rights of states to adopt California standards for these engines.

We estimate that by 2030, the rule's emission reductions would annually prevent 450 PM-related premature deaths, approximately 500 hospitalizations, and 52,000 work days lost. The total estimated annual benefits of the rule in 2030 would be $3.4 billion. Estimated costs in 2030 would be many times less at $240 million.

These standards are way past overdue. The rule became something of an orphan at the agency, as it chased its tail on the greenhouse gas issue before the White House put down its heavy foot on that topic. We are not sure of all the reasons for the most recent delays, though the EPA docket does include an interesting e-mail exchange which suggests the boat-building lobby went crying to the Coast Guard about this. (It also would affect gasoline boat engines.)

I am not sure how they became privy to some of the details, which certainly weren’t shared with us! So typical of this administration to work out the details with industry.

At any rate, keep your eye on this one.

**Another very interesting development out of New York, where some retired transit workers have filed suit against makers of diesel engines and buses, claiming the diesel fumes led to cancer and other medical problems. http://www.sunherald.com/451/story/755294.html

It is the first such suit in the US to my recollection, so it could become extremely significant.

Tuesday, August 12, 2008

We are taking a break from enjoying the record success of fellow Baltimorean Michael Phelps to bring you a brief update on several issues never far from mind – coal, cars and corn. (The item at the bottom is perhaps the most disturbing.)

Coal calls: One of the real running themes of the Bush administration is its almost slavish devotion to the coal-burning electric power industry. And one key result has been the astonishing delay often afforded some of the worst polluters. And darned if they aren’t at it again. As you probably know, the Bush administration has not only asked a federal court for more time to decide if it should appeal the decision which struck down its interstate pollution rule, but now is asking the US Supreme Court for more time before deciding whether to appeal the court decision which shot down the industry-friendly Bush mercury plan. (There is virtually no one who would believe even this Supreme Court would touch this. It’s a stall tactic pure and simple.)

At least the state of North Carolina isn’t sitting on its hands. The state has joined the Sierra Club to ask a court to expedite action on the state’s attempt to invoke part of the Clean Air Act that permits states to petition EPA to take action against big sources of pollution in upwind states. http://www.newsobserver.com/102/story/1173142.html

**Coal hard truth: On a related topic: The presidential campaign has been marked in recent weeks by debate over gasoline prices and drilling. But there’s another energy issue out there of at least equal long-term importance: what will be the role of coal in our energy future. It could take on new prominence as Barack Obama names his running mate. Eric Schaeffer, head of the Environmental Integrity Project, and I look at the record of several people supposedly on the Veep “short list” in a commentary at http://gristmill.grist.org/story/2008/8/11/124924/011

**

Cars and corn: You will recall last week’s controversial call by the EPA to reject Texas’ request to reduce ethanol mandates.

Kiplinger’s Biofuels Market Alert reports that some oil companies and fuel distributors appear to be putting more than the legally permissible 10% ethanol in gasoline. (Is that why smog levels generally are somewhat worse this year?) To quote from the story:

Auto manufacturers, some state regulators and a maker of gasoline dispenserparts say concentrations ranging from a bit over 11% to as much as 20% areshowing up in spot tests. Moreover, an independent analysis of Energy Departmentmonthly data suggests that in the first five months of 2008, there was an excessof 500 million gallons of ethanol. This amount cannot be readily explained byeither the amount of E10 blending, as gathered from Energy Department reports,or the meager E85 market.

What's at stake?

Forcheating distributors, a $32,500 a day fine from EPA, though, so far, the riskof being caught has been miniscule.

For the ethanol industry, itsreputation and future sales. Blends of more than 10% haven't been proven OK touse in cars or small engines -- lawn mowers, snowmobiles and so on. Any jump inpoor engine performance reports is likely to be laid at the doorstep of theethanol industry, scotching chances of an official blessing for higherblends.

For consumers, there's a risk that illegal blends willdamage motors.

The US EPA reportedly is going to step up its enforcement against illegal levels of ethanol.

Thursday, August 07, 2008

IT was cast as a battle of corn versus cattle, and fuel versus food. And that is undoubtedly true.

But what’s been given short shrift in the EPA rejection of Texas Governor Perry’s ethanol waiver request is the damage that corn-based ethanol is causing to the environment.

Corn-based ethanol isn't just raising food prices. It is causing more smog, adding to global warming, and causing more water pollution.

Here is the reaction of our friends at the Clean Air Task Force, Environmental Working Group and Friends of the Earth. They had urged EPA to grant the Texas governor's request to pare back the ethanol mandate:

EPA Ignores Environmental Warnings Over Flawed Ethanol Mandate

WASHINGTON, August 7, 2008. Three prominent national environmental groups criticized today�s Environmental Protection Agency (EPA) announcement that it would not grant Texas Governor Perry�s request to temporarily waive the federal mandate for ethanol. Friends of the Earth, Clean Air Task Force, and the Environmental Working Group had urged the EPA to grant the waiver to Governor Perry.

The groups contend that the current Renewable Fuel Standard lacks sound environmental protections.

�America should be focusing on viable clean energy solutions like conservation, solar and wind. Instead, the misguided corn ethanol mandate is forcing farmers to plow up marginal land and wildlife habitat, while increasing global warming and dumping toxic fertilizers and pesticides into our precious water sources,� said Environmental Working Group Director of Government Affairs Sandra Schubert.

"Evidence continues to mount that shows that EPA's current approach to renewable fuels will likely increase global warming pollution, and will do almost nothing to lower energy costs or increase energy independence," said Jonathan Lewis of the Clean Air Task Force.

�Biofuels are not the solution that corporate agribusiness is making them out to be,� said Kate McMahon of Friends of the Earth. �They are worsening global warming and polluting our air, water and soil. That�s why today�s EPA decision is so important. By denying the waiver, the EPA failed to take advantage of an opportunity to limit this foolishness. Instead of getting stuck on false solutions, what we need to do is use less fuel altogether.�

Other groups like the Network for New Energy Choices, which issued comprehensive recommendations for U.S. biofuels last year, voiced their concerns about the EPA�s policy decision as well.

�The EPA missed an important opportunity to slow down the rush to ethanol before committing the nation to dramatic increases in production,� said Dulce Fernandes, associate director of the Network for New Energy Choices, �The energy bill authorized studies of the effects of expanding the Renewable Fuel Standard. Those studies should be undertaken at once, and a sustainability standard established for ethanol production before increasing investments of acreage, infrastructure and other resources. Big picture analysis is needed � including ethanol�s effects on U.S. energy independence, food prices, and the environment if the nation is to adopt biofuels in ways that are beneficial, rather than destructive.�

1615 H Street, N.W.Washington, D.C. 20062-2000202/463-5310August 4, 2008TO THE MEMBERS OF THE UNITED STATES CONGRESS: The U.S. Chamber of Commerce, the world’s largest business federation representing more than three million businesses and organizations of every size, sector, and region, urges Congress to enact legislation preventing the trigger of greenhouse gas regulation under the existing Clean Air Act (CAA).

On July 30, 2008, EPA published in the Federal Register a controversial Advance Notice of Proposed Rulemaking (ANPR) that sets forth a multitude of CAA programs EPA would use to regulate greenhouse gas emissions, resulting in the “glorious mess” described by House Energy and Commerce Committee Chairman John Dingell earlier this year. The programs contemplated by the ANPR would give EPA vast control over the daily operations of many aspects of our economy not presently regulated by EPA, all in the name of global warming. This is far too much economic control by an agency that was created by an Executive Order without an overarching mission set forth by Congress. T

he ANPR itself is EPA’s response to the Supreme Court’s decision in Massachusetts v. EPA. The Court ordered EPA to answer the limited statutory question of whether greenhouse gas emissions from new motor vehicles cause or contribute to air pollution reasonably anticipated to endanger public health or welfare.

The bulk of the ANPR, an unedited draft analysis of statutory and mobile source greenhouse gas regulation under all applicable CAA programs prepared by EPA’s career staff, goes well beyond the Court’s directive in Massachusetts and offers a chilling look at the reach EPA would have if allowed to regulate emissions in this manner. EPA staff clearly believes they are empowered by the CAA not only to regulate the specific emissions from cars, trucks, planes, trains, boats, office buildings, refineries, manufacturing plants, tractors, lawnmowers, motorcycles, schools, hospitals, breweries, bakeries, farms, and countless other sources, but also to set radical new standards for the design and operation of those sources.

The ANPR also discusses, at length, the formidable shortcomings of application of the CAA to greenhouse gases. EPA staff even seems to acknowledge that the CAA is a poor vehicle for such complex and comprehensive regulation, and EPA Administrator Stephen Johnson, along with the heads of eight other federal agencies and offices, outright denounced the CAA as ill-suited for the task of regulating greenhouse gases. However, EPA staff state in their draft analysis that unless and until Congress steps in, they will continue down the path of CAA regulation, and the ANPR sets forth the roadmap as to how our economy will ultimately look.

With just months remaining until a new president and a new Congress, it is unsettling that the hours of hearings, considering bills, and debating the finer points of global climate change in the 110th Congress could be rendered useless due to the heavy-handed actions of unelected officials responding to a very narrow court order. While Congress is grappling with this complex issue, EPA, through the ANPR, has gift-wrapped a solution none of us want. The U.S. Chamber strongly urges Congress to enact legislation prohibiting EPA from regulating greenhouse gases under the Clean Air Act. Sincerely, R. Bruce Josten

It is in the spirit of partnership between EPA workers and managers toward fulfilling the Agency’s mission that we address this letter to you.

We write on behalf of the EPA employees that we represent to express our collective dismay over the way in which the Advance Notice of Proposed Rulemaking (ANPRM), “Regulating Greenhouse Gas Emissions Under the Clean Air Act,” was presented for public comment.

The way in which you subverted the work of EPA staff in your preamble statement on the merits of the supporting rationale for the ANPRM was as unprecedented as it was stunning to your staff and damaging to EPA’s reputation for sound science and policy. And the fact that EPA’s experts who worked on this ANPRM were not given the opportunity to read or address the adverse comments of OMB, USDA, Department of Commerce, Department of Energy, and the Department of Energy in advance of the ANPRM publication is troubling and, quite frankly, unprofessional. We believe that EPA’s hardworking, dedicated staff has earned more respect than you are giving. It makes your public and private pronouncements of thanks to EPA staff ring hollow. We would ask you to allow these EPA experts to submit responses to these agency submissions as part of the ANPRM public comment process.

The decision to publish the critiques of other agencies in the name of “transparency” in decision-making is both disingenuous and counterproductive. A far more direct contribution would be made to the credibility and transparency of EPA decision-making if you cooperated with congressional requests for documents and hearings. The professional staff of EPA has nothing to hide. In fact, contrary to your assertions of executive privilege, the free flow of policy recommendations would be aided by opening up all (not just selected) communications to public scrutiny.

Based on the media-covered responses to the ANPRM in the Wall Street Journal [1] and from the U.S. Chamber of Commerce’s William Kovacs[2], EPA is being portrayed as foolish and dictatorial. Your action has lent support to critics like those above and the indicted former Congressman Tom Delay who characterize EPA’s civil servants - who are sworn to duty and charged with helping to protect the environment - as virtual enemies of the United States, an outrage that is unacceptable. We fear your action may make it more difficult for EPA and your successor, whether he or she takes office in January or before, to act decisively to protect the environment and public health. Without the public’s respect and support, EPA’s work to implement the environmental laws of our nation is jeopardized. The silence from your office in the face of such calumny and your failure to come to the Agency’s defense, wounds us far more than the ranting of Delay, Kovacs and the Wall Street Journal.

You were once one of us. We were proud when you were nominated as the first of us to occupy the Administrator’s Office, and we expected great things. Our disappointment is profound.

We hope that in your final days in office you will try to rectify some of this damage and remove some of the tarnish from your legacy.

Who We Are

Clean Air Watch is a national non-profit, non-partisan organization devoted
to protecting Clean Air Laws and polices throughout the
United States. We closely monitor clean air and climate policy and seek to present a public-interest perspective grounded in fact and analysis.